In China, the word on the street is that Apple is moving 50% of its display sourcing to Japanese maker Sharp. This rumor (which is not new) is to be taken with the highest level of caution because it is based on the idea that Apple would update its 9.7″ iPad “this summer”, which seems very unlikely to start with. The rumor comes from Apple Daily, which is based in China.

The new display would use indium gallium zinc oxide (IGZO), which should allow displays to be thinner and use less power. Sharp is the only display manufacturer to use this technology as far as we know and has announced mass-production of those IGZO LCD panels back in April.

If/when this happens, Samsung would lose a significant part of its business with Apple, as it is currently providing 60% to 70% of Apple’s iPad panels (and about half of the iPhone 4S components), according to Digitimes. The rest is being supplied by LG.

One could think that Apple is doing in the context of a ferocious competition against Samsung Mobile, Apple’s single largest competitor, but it should also be noted that Apple’s contract manufacturer Hon Hai has made a significant investment in Sharp, and could be a force behind a rumored change.

In the end, it’s not unreasonable to think that the Hon Hai + Sharp pair may be able to propose cheaper and better displays to Apple, who is otherwise eager to send as little money to Samsung as possible.

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